Market Analyst Warns of Possible Bizjet Bubble

 - February 20, 2023, 12:45 PM
Values for preowned midsize business jets, such as this Cessna Citation XLS Gen2, have climbed 50 percent since last year, according to data from Ascend by Cirium. (Photo: Textron Aviation/Cessna)

Newly-released analysis from Ascend by Cirium shows that market values for many business jets have increased perhaps unsustainably during the post-pandemic period on a constant age basis (comparing the same age of aircraft over time).

While the preowned business jet inventory increased in the second half of 2022, pricing for completed transactions continued to rise and “buyer distress” transactions—where customers were willing to pay higher prices, above the asking price in some competitive situations—continued throughout the year.

According to Ascend senior appraiser and principal aviation analyst Syed Zaidi, business jet values soared due to various factors, including the surge of new users into the market since the pandemic began. This includes a 60 percent rise in midsize jet values from a year ago and approximately 45 percent higher for very light and super-midsize jets. Long-range jets values increased by 20 percent year-over-year.

Zaidi warned that market values may have entered “bubble” territory and constitute a real risk to owners, financiers, and investors, as the market-to-base value ratios which his company uses as a measure of potential risk, are “significantly” above 100 percent across most aircraft segments. He added that as the airlines continue to repair their schedules to pre-pandemic frequencies, the staying power of those new users will prove a true test for the business aviation industry.